By Aschalew Tamiru
I am writing articles on various branding issues on the renowned weekly Capital newspaper. Misconception about Branding, Basics to Successful Branding, Why Do Brands Matter, Can anything be Branded, How to Organize your Brands, Which Type of Logo Fits your business How to Organize your Brands and Why to Consider Rebranding? are among others.
This article is exploring the idea of co-branding and try to show the factors that companies need to consider if they want to generate a beneficial public response for each partnering company involved in the co-branding.
Co-branding is a form of partnership, where two or more companies or brands share their brand names, logos, etc., on one project or one product. Co-branding presents one or more offers, using the combined resources and marketing power of two or more brands to sell.
It is the utilization of two or more brands to name a new product. The partnered brands help each other to achieve their aims. This can be of the same company or from two distinct companies. The main brands of the new brand help each other in achieving the purpose of the newly created brand, co-branded. Co-branding tends to create an overall marketing synergy by creating a larger customer base which combines the existing customer base of the brand pairs, highlighting the best features of every brand. In other words, when two or more brands join hands with the objective of increasing the market share by producing the joint product or service and carrying the marketing activities jointly is termed as Co-Branding. Thus, two or more companies come together to capitalize on the brand image of each and offer a product jointly with the intention to boost sales by attracting the individual customers of both.
In partnership with Queens and Home Depot supermarkets, Dashen bank has launched a co-branded gift and purchasing card. This card is beneficial to customers who want to make their purchase at all branches of queens and Home depo supermarket and it can also be transferred to third parties as a gift so that the holder of the card can make purchase from the aforementioned supermarkets.
Most branding scholars mention the following four types of co-branding types as the widely applying co-branding strategies.
- Ingredient Co- Branding- In Ingredient Co-Branding, the well-known brand is used as a component in the production of another renowned brand. This type of Co-Branding is done with existing suppliers or large buyers. Ingredient co-branding makes use of a popular brand to serve as an important element in the production process of the other popular brand. This basically deals with the development of brand equity (the worth of a brand) for those parts and materials that are included in other products. The underlying constituent brand is a subsidiary to that of the primary brand. For example, Dell computers utilize a co-branding strategy with Intel processors.
Ingredient brands are normally the biggest buyers or current suppliers of the company. Through this type of branding, the company can produce products of better quality gain more access to distribution channels, implement superior promotional activities and real greater profits. This is also widely applied in automobile manufacturing industries; the automobile manufacturing companies make partnership with various suppliers of automobile components.
- Promotional/ Sponsorship/ Co-Branding– This type of Co-Branding is common and very much seen in Entertainment Industry and Sports leagues where renowned brands sponsor the film award functions, sports, social events, etc. with the objective of creating the brand image. Vodafone (one of the renowned telecom operator, which is also among the winners of the bid to operate in Ethiopia), Honda, Citi Bank are the official sponsors of Indian Premier league; where as Coca-Cola, FedEx, Heineken, Volkswagen are the sponsors of Euro 2020 football cup which is happening now.
- Value Chain Co- Branding-Product Service Co-Branding– the co-branding partnership that has been made between the Ethiopian Airlines and Hibret Bank is a good example for value chain co-branding particularly called product service type. The Ethiopian Airlines and Hibret Bank have come up with a co-branded debit card which is tailored to provide Ethiopian Sheba Miles members with bonus miles for their spending using the debit card.
Through co-branding partnership, MasterCard and Apple have been working together in making transactions cashless. MasterCard company supported Apple Pay. This provided Apple with a generous customer base along with changing its service along with providing MasterCard brand new feature and function which was exclusive to its customers. The co-branding move of the companies contribute to boost their brand value and come at the front in the list of high brand value companies announced by the renowned forbs business magazine every year.
- Innovation Based Co-Branding-Nike and Apple have come together and formed co-branding agreement through innovation. Nike determined that their customers who are runners like to listen to music when they exercise or want to track their progress. This led the company to form a partnership with Apple so that customers can do both. Nike also produced footwear under the title Nike and Apple manufactured a chip that is fitted within the shoes for recording the progress of the user when it is activated on their iPhone or iPod. This microchip displays user statistics like time, distance and speed along with the number of calories burned.
Branding scholars acclaim that if Co-Branding is executed carefully it can bring the following benefits to the companies:
- New sources of finance will be available.
- Generation of royalty income.
- Risk sharing capacity will increase.
- More income can be generated because of increased customer base.
- Customer trust can be gained through its prior experience with any one of the brand.
- Wider scope because of joint advertising.
- Technological benefits.
Better image of the product through the association with other renowned brands.
According to branding scholars, Co-Branding can result into a failure if:
- Brands are different and cater different market segments with the entirely different product range.
- If the vision, values, and ethics of the brands are different, the partnership may fail in future.
- Seeking an alliance with wrong brands will not provide customer value and will be unable to meet their expectations which will result in product failure.
- The customer had a bad experience with any one of the brand it will have a negative impact on the other.
- Lots of liabilities on one brand will impose pressure on the co-brand.
- Any one brand files bankruptcy the image of other will also get adversely affected.
Various articles and books written on branding are used as references.
Aschalew Tamiru was a full time lecturer at various universities, currently he is working with Dashen Bank, as Marketing and Customer Experience Director.
Aschalew holds MA in Marketing Management from Addis Ababa University. He is a writer of Make a Difference with Customer Service Book and a certified Management Consultant. He can be reached by firstname.lastname@example.org.